You also mention private equity — that is in
fact part of my asset allocation plan — approximately 10 % will be split between a US private equity ETF and an international private equity ETF.
Third Misconception: Expected Return Is All You Need Even assets with disappointing expected returns can be a
significant part of an asset allocation plan, as long as they offer diversification benefits.
Real estate does not have a strong correlation to stocks or bonds and should be
part of your asset allocation.
As you say,
that part of the asset allocation recipe is discussed a lot.
The Dividend Guy uses small - caps as
part of his asset allocation — this post discusses why.
Investing in corporate bonds might make sense for you, if: Bonds are
a part of your asset allocation plan and you're investing a certain percentage of your portfolio in them.
However, for some people it might make sense to have it as
part of your asset allocation.
You'd have an emergency fund in a savings account while perhaps simultaneously maintaining a cash position in a brokerage sweep account as well, as
part of your asset allocation.
For instance, let us say that you have 60 percent equity exposure and 40 percent exposure in debt, as
a part of your asset allocation strategy.